Do markets care who chairs the central bank?
By: Kenneth N. Cuttner, Adam S. Posen.
Contributors: Posen, Adam Simon.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13101.; Working paper series (National Bureau of Economic Research) -- working paper no. 13101.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 37
Subjects: Banks and banking, Central -- Management; Capital market -- Econometric models; Monetary policy -- Economic aspects
Description: This paper assesses the effects of central bank governor appointments on financial market expectations of monetary policy. To measure these effects, we assemble a new dataset of appointment announcements from 15 countries, and conduct an event study analysis on exchange rates, bond yields, and stock prices. The analysis reveals a significant reaction of exchange rates and bond yields to unexpected appointments. The reactions are not unidirectional, and thus do not suggest new governors suffer from a generic credibility problem. Federal Reserve chairman appointments stand out in terms of their unusually pronounced effects on financial markets.
Notes: "May 2007"

Includes bibliographical references (p. 28-29).

Also available in PDF from the NBER world wide web site (www.nber.org).